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Some analysts are saying Hurricane Sandy’s historic landfall will result in only a modest and “ultimately transitory” hit. This comment came as a key announcement was made during the Federal Reserve’s routine media presser. Further, President of the Federal Reserve Bank, William Dudley said he expects to continue providing support for “central bank stimulus to aid an economy that’s growing too slowly”.

Indeed it is. In fact, earlier this month, another report, the Quarterly Report on Household Debt and Credit, the numbers showed some areas of the economy are struggling more than others and if you’re thinking it’s credit card debt, you might want to think again. Consumer debt and delinquency rates have been falling, though there are many who feel delinquency rates are falling due to the number of credit card companies and banks writing off what they feel is noncollectable debt. It’s student loan debt that has economists worried these days. It has been climbing for years, though 2012 is by far the worse year for unpaid debt in the student loan sector. It totaled more than $56 billion at the end of 2012 3rd quarter, which is $42 billion more than last quarter.

While the Fed didn’t specifically address all loan debt, and in fact, wouldn’t as part of its updates, there were other comments that provided insight into the agency’s thinking.

The Fed will promote maximum employment and price stability to the greatest extent our tools permit, and we will stay the course” when it comes to pursuing a monetary stance aimed at promoting growth.

It also reiterated Ben Bernanke’s mindset and said even after the economy begins improving, the stimulus efforts of the central bank should continue to move forward, saying a stronger recovery isn’t a reason to pull back on its policies.

Federal Open Market Committee

The monetary policy setting Federal Open Market Committee, in which Dudley also serves as vice chairman, also recently kicked off what it says is an “open ended mortgage bond buying program aimed at lowering unemployment by spurring better growth”. Meanwhile, the commitment to keeping short term rates low for at least another 18 months stands. The next meeting, in mid-December, will likely include decisions on whether or not it will continue its short dated bonds program.

Operation Twist, as it’s known, will likely be altered, though some understood from the presser that Dudley remains non-committal. In reference to Operation Twist, he said he and his agency would be assessing both inflation and unemployment until then in its efforts to decide whether Treasure purchases would continue into the new year.

Sandy Influence

Despite those topics, the vast majority of his comments were focused on the financial repercussions of Hurricane Sandy.

Even before the storm, though, the pace of U.S. economic growth was disappointing,

he said when discussing “unacceptably high” unemployment rates.

I expect a modest negative effect on the annualized growth rate of real GDP for the fourth quarter of 2012,

to the tune of shaving 1/4 to 1/2 percentage point off of GDP. He then said he didn’t anticipate any real threats from the storm to affect the regional financial and economical expansion efforts.

He also said current job rate growth is insufficient even as other analysts still say it’s non-existent. He said his agency would also be watching closely the labor markets, which affect everything from consumer spending to international considerations.

Housing Data

A few weeks ago, during the Housing Data Wrap Up, Ben Bernanke made mention – several times, actually – the fiscal cliff and how it might affect everything from personal finance to housing. As a result, the forecast was updated, including the potential for a third round of quantitative easing with the goal of stimulating activity while also reducing unemployment. As we know, the announcement of $40 billion per month of mortgage backed securities was the solution the Fed came up with.

Wells Fargo Bank has its owns thoughts and said the Fed’s influence should put “downward pressure on long-term interest rates”, but also said any benefits from a move such as this would be modest at best and said mortgage rates are already low. It also says the key is found in what ultimately happens with the fiscal cliff. Wells Fargo spokesperson said that’s what’s really led to a slowdown in hiring and a continued loss of consumer confidence.

What really ails the economy is the lack of a coherent fiscal policy, and monetary policy is not a perfect substitute for fiscal policy,

Wells Fargo’s Economics Group said.

Any benefit to the housing market from the Fed’s latest move is likely limited until we see some resolution to the issues surrounding the fiscal cliff, which means the real payoff from even lower mortgage rates likely will not be apparent in the housing market until early 2013.

It’s still believed the quantitative easing is not expected to have great effect on interest rates, Wells Fargo expressed its belief that the added attractiveness of non-agency mortgages and the added liquidity to the mortgage market will boost builder and lender confidence, which would lead to a surge in both home sales and home construction this spring. That could play a role in how consumers approach their access to credit, and specifically, their credit cards, too.

This may have been part of the motivation for the Fed’s actions,

the Wells Fargo group said.

Monetary policy is typically more effective when it is going with the tide instead of trying to reverse it.

A lot of these assumptions are based on what happens in terms of current and future short term economic growth. If it remains more or less flat and the fiscal cliff is safely avoided, Wells Fargo expects that the housing recovery will continue in slow turns until finally rising back up to normal conditions in the second half of the decade.

What are your thoughts? Do you believe one economic action decides another, in a domino effect, or do you think the federal government is clueless in how average American consumers are approaching their own financial outlooks? Share your thoughts with us and join the conversation.